Founder of delegate platform Aave Chan Initiative (ACI), Marc Zeller, has proposed that the Aave Treasury purchases $2 million worth of CRV tokens from Curve founder Michael Egorov.
This proposal comes days after Curve Finance suffered an exploit causing a CRV price decline that has endangered Micheal’s Egorov’s loan positions on various lending protocols.
According to blockchain research company Delphi Digital report on August 1, Egorov owes approximately $100 million in loans on lending protocols Aave and Frax Finance.
Interestingly, these loans are collateralized by 427.5 million CRV, i.e., 47% of the token’s circulating supply. Following CRV’s price decline this week, these loan positions could be liquidated, which could be risky for the entire DeFi space.
So far, several notable crypto players have bought CRV in over-the-counter trades from Ergorov. These include Tron founder Justin Sun, DWF Labs, and, most recently, Huobi co-founder Jun Du.
Related Reading: Buying The Dip: Tron Founder Justin Sun Buys 5 Million CRV In OTC Deal
Let’s Show DeFi Supporting DeFi, Zeller Says
Marc Zeller is a popular figure in the Aave network, having headed the protocol’s integrations team between 2020-2022.
In his proposal submitted on the Aave governance forum on Aug. 3, Zeller suggests the purchase of $2 million worth of CRV using USDT in a bid to support DeFi and grant the Aave DAO a beneficial position in the Curve ecosystem which could translate into higher liquidity for Aave’s stablecoin GHO.
A statement from the proposal read:
A 2M USDT worth of CRV acquisition would send a strong signal of DeFi supporting DeFi while allowing the Aave DAO to strategically position itself in the Curve wars, benefiting GHO secondary liquidity.
Zeller elaborates on his plans stating that $2 million translates into roughly 5 Million CRV tokens which can be locked as veCRV to obtain voting power on Curve Finance. Using these tokens, Zeller believes the Aave DAO can boost GHO liquidity by incentivizing Curve users to deal with GHO trading pairs.
According to the proposal, the ACI founder also stated this purchase is quite possible given the treasury’s current balance and projected decline in service provider expenses for the 2023-2024 budget.
Aave Community Reacts To Proposed CRV Purchase
So far, there have been mixed reactions to Zeller’s proposal on the Aave governance forum. A community member with the username “X38x” has slammed the proposal saying that Aave should minimize its exposure to CRV, not vice versa.
Meanwhile, another member named “Figue” commends Zeller’s proposal stating it helps neutralize the current “CRV over-leverage” and support GHO development.
For now, Zeller is still getting feedback on this proposal, and with a consensus, it will be updated to an Aave Improvement Proposal (AIP).
CRV is trading at $0.586 at the time of writing, with a 1.15% gain in the last 24 hours. However, it is worth stating that the DeFi token is 20.54% down from its price on Sunday when the heist occurred.
CRV trading at $0.590 on the 4-hour chart | Source: CRVUSD chart on Tradingview.com
